Ladies and gentlemen, welcome to our 2019 first quarter results call. I'm Kesko's President and CEO, Mikko Helander. Together with me, I have our CFO, Jukka Erlund, and Vice President, Investor Relations, Kia Aejmelaeus. I will first give a brief overview of our business performance, and after that, we will be happy to take questions. Our good progress continued in the first quarter and strategy execution proceeded in all divisions. The comparable operating profit decreased due to acquisitions that increased seasonal fluctuations and due to market disturbances in the car trade division. Growth in grocery trade division continued to outpace the market. We made acquisitions in line with our growth strategy in the Swedish building and home improvement trade and in the Finnish car trade. We have changed our financial reporting to comply with the new IFRS 16 leasing standard. We set new financial targets for the group.
Our comparable operating profit for the quarter calculated in accordance with the new IFRS 16 standard totaled EUR 57.5 million, while under the previous accounting practice, the figure would have been EUR 34.9 million. Finance net has increased to minus EUR 23.7 million, as it includes EUR 24.6 million in interest expenses for lease liabilities. The adoption of the IFRS 16 standard does not have a material impact on our profit before tax, which amounted to EUR 34.6 million for the period. Earnings per share were 0.33, slightly down from 0.34. The group's first quarter comparable sales decreased by 0.6% to EUR 2 billion 400.8 million due to the timing of Easter and the decline in the car trade sales. First quarter comparable operating profit was EUR 57.5 million, down from EUR 63.8 million. Performance was affected by acquisitions increasing seasonality and the decline in car trade sales.
In the graph, we have given a breakdown of operating profit under the previous accounting practice as well as the impact of the IFRS 16. The group had liquid assets of EUR 237.6 million at the end of the reporting period. Interest bearing net debt excluding lease liabilities totaled EUR 174.6 million and the corresponding net debt to EBITDA ratio was 0.4. Lease liabilities accounted for EUR 2 billion 287 million. Cash flow from operating activities totaled EUR 157 million and EUR 77.9 million, excluding the impact of IFRS 16. Cash flow was strengthened by improved capital efficiency and the EUR 48.3 million return of surplus assets paid by Kesko Pension Fund in March 2019. The capital expenditure totaled EUR 97.3 million, including EUR 37.7 million in acquisitions. Our financial position remained strong. Return on capital was 9.5%. It remained good in grocery trade.
The return in car trade was still at a good level despite the decline in sales. I will discuss next the business development by division, first grocery trade. First quarter comparable sales increased by 0.4% to EUR 1 billion 264 million. Grocery trade comparable operating profit was EUR 56.8 million, up from EUR 55.2 million. First quarter operating profit improved despite the timing of Easter. K Group's retail sales increased by 1.5%. This clearly exceeded the market growth of 0.4%. We saw growth in all chains despite the timing of Easter season, which fell on April this year. Our customer numbers and market share continued to increase. Online sales growth continued strong and totaled 110%. Operating profit was boosted by good development in all chains and increased operational efficiency.
We continued with our strong transformation in grocery trade towards a better customer experience in all channels and by launching new digital services. Next, building and technical trade. First quarter comparable sales increased by 5.6% to EUR 867.5 million. Comparable operating profit was EUR 3.9 million, down from EUR 5 million. Operating profit tends to be lowest in the first quarter. Acquisitions have increased seasonality, impacting first quarter profit by minus EUR 3.6 million. Sales growth in building and technical trade was particularly good in the Baltics, Finland, and Poland. In Norway, growth was boosted by the acquisitions made to strengthen the Byggmakker chain. Comparable growth in net sales was 5.6%, overall development 8.1%. Operating profit was EUR 3.9 million, including a minus EUR 3.6 million impact from acquisitions increasing seasonality. More about the recently announced acquisition on the next slide. Strong strategy execution continues in Sweden.
K-Rauta's extensive transformation program to improve profitability and strengthen market position is underway. Divestment of Onninen's contractor business in Sweden will improve profitability and enable us to concentrate on the growing infrastructure construction business. Acquisition of Fresks will make Kesko one of the leading building and home improvement trade operators in Sweden. Fresks has mainly small and medium sized B2B customers specializing in renovation. Its 2018 pro forma net sales were EUR 205 million and comparable EBITDA EUR 18 million. We expect to gain significant economies of scale and synergies. In the specialty goods trade, sales and profitability remained at a good level in leisure trade. Divestment of machinery trade operations is ongoing. Next, in car trade. First quarter comparable sales decreased by 21.9% to EUR 200.5 million. The new emissions testing and uncertainties regarding taxation and choice of motive power have led to a temporary decline in net sales.
At EUR 7.7 million, car trade first quarter comparable operating profit remained at a good level despite temporary market disturbances. As just mentioned, despite market disturbances, our car trade profitability remained good. Problems in car availability reduced temporarily our market share. We expect the market to normalize in the second half of this year. During the first quarter, we expanded our dealer network by acquiring businesses from Huittisten Laatuauto and LänsiAuto. Lastly, a few comments on the future. Our outlook is based on the IFRS standard that took effect on the 1st of January, 2019. In comparable terms, the net sales as well as the comparable operating profit for continuing operations for the next 12 months are expected to exceed the level of the previous 12 months.
As a result of the successful execution of our growth strategy, we have significantly improved our profitability and have been able to meet the target level for return on capital employed set in 2015. The board of directors has approved new medium term financial targets for Kesko. The new profitability targets are operating margin and return on capital employed. As for financial position, the group now targets maximum interest-bearing net debt to EBITDA, excluding the impact of IFRS 16. Earlier this year, we updated also our dividend policy. We will continue to execute our growth strategy. The cornerstones of Kesko's strategy are profitable growth in all divisions and one unified K. This ends my prepared remarks. Thank you for your attention. We will now be happy to answer any questions you may have.
Thank you, ladies and gentlemen. If you do have a question at this time, please press 01 on your telephone keypad. There will be a brief pause while questions are being registered. Once again, ladies and gentlemen, if you do have a question, please press 01 on your telephone keypad. There will be a brief pause while questions are being registered. Speakers, it looks like we've got no question at this time. I'll hand the conference back to you.
Thank you. I could start with a couple of questions we have received online. I hope there will be meanwhile more questions. To begin with the new financial targets that were announced, what kind of timeframe do you have in mind and how have you or will you reach the set EBIT margin?
Those new financial targets are for midterm. In this occasion, midterms means time frame from three to four years. About financial targets, we feel that those are absolutely very realistic, but also have enough challenges. There is definitely space in all three divisions for further improvements. Of course, the biggest profit improvement potential we can see in building and technical trade. Once again, I repeat that we can see clearly also space for further improvements in grocery trade as well as in car trade.
Operator, do we have some more questions or shall we take a few still online?
There's currently no questions from the audio participants. Just to remind you, ladies and gentlemen, it's zero one to ask a question. I'll hand over back to you until we do have questions from the telephone participants.
Okay, thank you. I have a question on common costs. Could you elaborate on the level and expectations on common costs for the full year?
Regarding the common costs, we had a bit heavier load on the cost side on common costs during the first quarter, there were some sort of extra cost during the quarter. That might continue during the second quarter still somewhat as we are heading to our new headquarters, which we will take in use in June. Going to the third and fourth quarter, we expect to get to a normal level again on the common cost side.
Okay, another question, could you also elaborate a little bit on the impact of the acquisitions that you mentioned in building and technical trade and the seasonality that you have mentioned?
Yeah. First, we should remember that we did and we completed successfully extremely important acquisitions in Norway to strengthen our building and technical trade and specific retailing sales in Byggmakker chain. As everybody knows, in building and technical trade, seasonality is matter of the fact, and first quarter always is very slow and profit-making is very challenging. Most of players, including us, are normally loss-making operation in the first quarter. Due to that reason, completed acquisitions in Norway weakened our financial performance in first quarter. Integration we have done as planned, and we can expect from all acquisitions very strong sales development and big profit, positive profit impact in the coming quarters as planned.
Maybe I can add a little bit to Mikko's comment. The other quarters are positive on that side, and the strongest one is the third quarter, but although the second quarter is strong and actually the fourth one as well. It really relates to the first quarter seasonality that we have in the Norwegian business when it comes to profitability.
Of course, we expect that we will close successfully a big acquisition in Sweden. I would like to remind that this is also from strategic point of view, extremely important move and also Fresks chain is very profitable. All acquisitions in building and technical trade will strongly improve our operational commercial as well as financial performance in future.
Okay. I hope also to get still some questions live from the call, but there is one more online. Could you describe a little bit more on the rationale of the Fresks' acquisition, what will you get? Also what kind of synergy level could you describe and quantify on the expectations there? Also what is the current situation and level of losses in Sweden?
First, as many times stated, we expect that the whole building and technical trade market and business will be consolidated heavily in future. Sweden is clearly the biggest and strongest market in Northern Europe. Also, due to that reason, we can see that Sweden is very potential market for Kesko. We are doing our utmost to participate strong development of Swedish building and technical trade business. As you know, we have had long time already K-Rauta chain in Sweden. It has not been a success story. Main reason is that K-Rauta chain has been very strongly dedicated B2C business, but fastest growing, strongest market also in Sweden is B2B. Current measures to change K-Rauta are ongoing, and that will make K-Rauta more competitive in Swedish market.
From a strategic point of view, Fresks acquisition is utmost important because thanks to this acquisition, we will become now finally also very big and serious player in fast growing Swedish B2B market. Our intention is to create strong bind and combination of K-Rauta as well as Fresks chain, and that way to become in position to serve and to participate successfully in B2C and B2B segment also in Sweden. Onninen technical trade, we are very happy that we successfully divested heavy loss-making Onninen contractor business , and we continue in profitable infra business on Onninen side and remaining Onninen business, Fresks chain and K-Rauta are very competitive set up.
Once again, I remind our intention also in future is to participate the process to consolidate Swedish market, and we are in very good shape and in much better position thanks to actions ongoing in K-Rauta as well as thanks to acquisition of Fresks Group. Jukka, maybe you can continue.
Maybe just to add that on the synergy side, we obviously target both for top line synergies as well as for the cost side synergies. That work is obviously very important in this integration and later on we will report in more detail on this issue.
Kia, do we have more questions?
For your information, I hereby confirm there's no questions from the telephone line at this stage.
Okay. Well, at this stage we don't have online questions either.
Okay. This is busy day. Many companies have published their first quarter results. Anyhow, thank you for your participation. Kia, Jukka, myself, we wish very pleasant evening, afternoon for everybody.
Thanks. Also maybe would like to mention that 24th of May we have the building and technical deep dive. If you wish to hear more details, please be in touch with me. Otherwise at the latest we'll see each other 24th of July with our Q2 results.
Exactly.
Thank you.
Thank you.
Feel free to get in touch.
Yeah, exactly. Thank you. Bye-bye.
Thank you.